Whitbread confirmed this morning that it plans to split off Costa, the UK’s largest coffee chain, as a separate business.
The company said it has been thinking about separating Premier Inn and Costa “for some time” but wanted to wait until it was the right time to optimise value for shareholders.
The plan now is to demerge Costa, providing shareholders with investments in “two distinct, focused and market-leading businesses”.
Whitbread said the split would be pursued as fast as practical and appropriate to ensure maximum return for shareholders. It is expected to take up to two years to complete.
The move will see Whitbread remain the owner of Premier Inn, while Costa will become a listed entity in its own right.
The company insisted the timing was right following Premier Inn’s scale in the UK, Costa’s leadership in the coffee sector and the expansion of both businesses internationally.
Adam Crozier, chairman of Whitbread, said: “A separation will provide enhanced focus for each business and give shareholders an investment in two high-quality businesses. We will ensure that prior to separation each business is sufficiently developed and well-positioned to take advantage of the structural growth opportunities available to them in the UK and internationally. Announcing our intention now provides clarity of our strategic direction to our shareholders, team members and other stakeholders.”
Preliminary full-year results from Whitbread, which were also released this morning, revealed the business grew sales by 6% to £3.3 billion last year. Underlying profit rose 4.5% to £591m.